The Ramos Company manufactures two products: Treadmills and Elliptical Trainers. The costs and revenues are as follows: Treadmill Elliptical Trainer Sales price per unit $ 300 $ 175 Variable cost per unit 160 85 Total demand for the Treadmill product is 7,000 units and for the Elliptical Trainer product is 5,000 units. Machine time is a scarce resource. During the year, 48,000 machine hours are available. A Treadmill requires 6 machine hours per unit, while an Elliptical Trainer requires 2.5 machine hours per unit. Required: a. How many units of Treadmills and Elliptical Trainers should Ramos produce? b. What will be the maximum possible contribution margin?
The Ramos Company manufactures two products: Treadmills and Elliptical Trainers. The costs and revenues are as follows: Treadmill Elliptical Trainer Sales price per unit $ 300 $ 175 Variable cost per unit 160 85 Total demand for the Treadmill product is 7,000 units and for the Elliptical Trainer product is 5,000 units. Machine time is a scarce resource. During the year, 48,000 machine hours are available. A Treadmill requires 6 machine hours per unit, while an Elliptical Trainer requires 2.5 machine hours per unit. Required: a. How many units of Treadmills and Elliptical Trainers should Ramos produce? b. What will be the maximum possible contribution margin?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
The Ramos Company manufactures two products: Treadmills and Elliptical Trainers. The costs and revenues are as follows:
| Treadmill | Elliptical Trainer | ||||||
| Sales price per unit | $ | 300 | $ | 175 | |||
| Variable cost per unit | 160 | 85 | |||||
Total demand for the Treadmill product is 7,000 units and for the Elliptical Trainer product is 5,000 units. Machine time is a scarce resource. During the year, 48,000 machine hours are available. A Treadmill requires 6 machine hours per unit, while an Elliptical Trainer requires 2.5 machine hours per unit.
Required:
a. How many units of Treadmills and Elliptical Trainers should Ramos produce?
b. What will be the maximum possible contribution margin?
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